The CEO of ISA Holdings Limited (JSE:ISA) is Clifford Katz, and this article examines the executive's compensation against the backdrop of overall company performance. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
View our latest analysis for ISA Holdings
How Does Total Compensation For Clifford Katz Compare With Other Companies In The Industry?
Our data indicates that ISA Holdings Limited has a market capitalization of R111m, and total annual CEO compensation was reported as R3.5m for the year to February 2020. That's a notable increase of 43% on last year. We note that the salary portion, which stands at R2.64m constitutes the majority of total compensation received by the CEO.
For comparison, other companies in the industry with market capitalizations below R3.0b, reported a median total CEO compensation of R3.3m. So it looks like ISA Holdings compensates Clifford Katz in line with the median for the industry. Furthermore, Clifford Katz directly owns R12m worth of shares in the company, implying that they are deeply invested in the company's success.
| Component | 2020 | 2019 | Proportion (2020) |
| Salary | R2.6m | R2.4m | 75% |
| Other | R862k | R37k | 25% |
| Total Compensation | R3.5m | R2.4m | 100% |
Speaking on an industry level, nearly 89% of total compensation represents salary, while the remainder of 11% is other remuneration. ISA Holdings pays a modest slice of remuneration through salary, as compared to the broader industry. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.
A Look at ISA Holdings Limited's Growth Numbers
Over the last three years, ISA Holdings Limited has shrunk its earnings per share by 11% per year. Its revenue is down 35% over the previous year.
Overall this is not a very positive result for shareholders. And the fact that revenue is down year on year arguably paints an ugly picture. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.
Has ISA Holdings Limited Been A Good Investment?
With a total shareholder return of 12% over three years, ISA Holdings Limited shareholders would, in general, be reasonably content. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.
To Conclude...
As we touched on above, ISA Holdings Limited is currently paying a compensation that's close to the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. ISA Holdings has had a tough time in recent years, with declining EPS growth, and although shareholder returns are stable, they are hardly worth celebrating. This doesn't compare well with CEO compensation, which is close to the industry median. We would stop short of the compensation is inappropriate, but we can't say the executive is underpaid.
CEO pay is simply one of the many factors that need to be considered while examining business performance. In our study, we found 2 warning signs for ISA Holdings you should be aware of, and 1 of them is a bit unpleasant.
Switching gears from ISA Holdings, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.
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This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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About JSE:ISA
ISA Holdings
An investment holding company, provides network, Internet, and information security solutions to the sub-Saharan African market.
Flawless balance sheet medium-low.
